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Internal Revenue Code

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USC Title 26 enacted through 2008

§ 1273. Determination of amount of original issue discount

General rule
For purposes of this subpart -
In general
The term "original issue discount" means the excess (if any) of -
the stated redemption price at maturity, over
the issue price.
Stated redemption price at maturity
The term "stated redemption price at maturity" means the amount fixed by the last modification of the purchase agreement and includes interest and other amounts payable at that time (other than any interest based on a fixed rate, and payable unconditionally at fixed periodic intervals of 1 year or less during the entire term of the debt instrument).
1/4 of 1 percent de minimis rule
If the original issue discount determined under paragraph (1) is less than -
1/4 of 1 percent of the stated redemption price at maturity, multiplied by
the number of complete years to maturity,
then the original issue discount shall be treated as zero.
Issue price
For purposes of this subpart -
Publicly offered debt instruments not issued for property
In the case of any issue of debt instruments -
publicly offered, and
not issued for property,
the issue price is the initial offering price to the public (excluding bond houses and brokers) at which price a substantial amount of such debt instruments was sold.
Other debt instruments not issued for property
In the case of any issue of debt instruments not issued for property and not publicly offered, the issue price of each such instrument is the price paid by the first buyer of such debt instrument.
Debt instruments issued for property where there is public trading
In the case of a debt instrument which is issued for property and which -
is part of an issue a portion of which is traded on an established securities market, or
is issued for stock or securities which are traded on an established securities market, or
to the extent provided in regulations, is issued for property (other than stock or securities) of a kind regularly traded on an established market,
the issue price of such debt instrument shall be the fair market value of such property.
Other cases
Except in any case -
to which paragraph (1), (2), or (3) of this subsection applies, or
to which section 1274 applies,
the issue price of a debt instrument which is issued for property shall be the stated redemption price at maturity.
In applying this subsection, the term "property" includes services and the right to use property, but such term does not include money.
Special rules for applying subsection (b)
For purposes of subsection (b) -
Initial offering price; price paid by the first buyer
The terms "initial offering price" and "price paid by the first buyer" include the aggregate payments made by the purchaser under the purchase agreement, including modifications thereof.
Treatment of investment units
In the case of any debt instrument and an option, security, or other property issued together as an investment unit -
the issue price for such unit shall be determined in accordance with the rules of this subsection and subsection (b) as if it were a debt instrument,
the issue price determined for such unit shall be allocated to each element of such unit on the basis of the relationship of the fair market value of such element to the fair market value of all elements in such unit, and
the issue price of any debt instrument included in such unit shall be the portion of the issue price of the unit allocated to the debt instrument under subparagraph (B).

Tax Code (Internal Revenue Code) Section Index

U.S. GAAP by Codification Topic
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold

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Tax Code (Internal Revenue Code) Section Index

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